I hate stall indicators, especially those old ones that sound like an evil kazoo. One second you’re in a bush plane idly speculating about how many million squirrels inhabit all the spruce trees you can see, the next you’re visualizing ploughing into those spruce trees at several hundred kilometres an hour.
Statistics Canada’s economists emitted a sharp, kazoo-like noise about the Yukon economy last week. It has stalled. Now we have to wait to see if level flight continues, or if those spruce trees start getting bigger fast.
After tallying up the figures for 2013, and just in time to rain on the Geoscience Forum parade, Statistics Canada reported that the Yukon had the worst economic performance in Canada.
Yes, the worst. Even perennial economic sluggards like New Brunswick and Nunavut managed to turn in better numbers than us.
The Yukon economy shrank by 0.9 per cent in 2013, and was the only economy other than New Brunswick to shrink. Canada grew at 2.0 per cent, and B.C. notched up a solid 1.9 per cent. Alberta and Saskatchewan achieved 3.8 and 5.0 per cent respectively – pretty impressive growth rates for anyone but the Chinese.
Yukoners can’t get much solace from looking into the details. Household final consumption, which is fancy economist talk for how much stuff people bought for day-to-day life, grew everywhere except the Yukon. Yukon households tightened their belts by 0.1 per cent.
Business gross fixed capital formation, more fancy talk for how much businesses invested for the future, plummeted a worrying 18 percent in the Yukon. That’s the worst figure in the country, and comes after a 25 per cent fall in 2012. This is quite a worrying indicator, since a fall often suggests businesses lack confidence in the future. This hypothesis is consistent with the fall in the number of business licences in Whitehorse in 2013 to its lowest level in five years.
Investment in residential housing also shrank almost a fifth, and corporate operating profits were lower.
There was some modest good news. Our exports increased and total compensation for employees grew.
With Yukon government spending surging in 2013, the overall decline in the economy means the private sector must have had a tough year. Figures from the Department of Economic Development suggest mineral exploration spending fell more than half, from more than $225 million in 2012 to less than $100 million in 2013. Spending on mine development also fell, by around a fifth.
Quite a few of the people I’ve talked to in the business community in Whitehorse also report that business is slow.
Okay, so we’ve heard the stall indicator from Statistics Canada. What should we do?
How can you stall-proof your lifestyle, or at least make sure you have a soft landing?
The first thing to do is to check your income and expenses. Some surveys suggest less than half of Canadians make a personal budget to plan their spending. If you are one of them, go online and use one of the many personal budget tools available. The Financial Consumer Agency of Canada has a handy one.
Hopefully, your monthly bottom line will be in the black. If you’re having trouble making ends meet now, however, think about how it will be if your business loses a few more customers or your boss cuts your hours. If you’re a non-profit, it’s not good when the people you are trying to raise funds from are cutting their household final consumption. Some cost cutting might be in order.
Some budget advisors suggest looking at your daily spending on small things. Those fancy coffees, lunches with friends and nights out can add up. Other experts disagree, and tell you to look at big-ticket items like your over-sized house or your gas-guzzling vehicle. They are all right, and you should go through your big and small expenses and decide if you can forgo some of them.
The next thing to look at is your debt. Paying down your loans, especially any high-interest-rate credit card debt, should be high on your list of priorities. Also now is probably a bad time to take out a big new loan, whether that’s for a house, a car or any kind of big purchase.
I hate to share another bad-news scenario, but what happens to the Yukon if the Bank of Canada raises interest rates nationally? They just might do that in the next year or two if the Canadian economy is doing OK. Of course, the national economy doing well isn’t much consolation if ours is tipping into a prolonged recession.
You’ll want to be particularly wary of this factor if you have floating rate debt. It’s cheap now, but might not always be.
Your early action won’t affect whether the Yukon economy goes into a nosedive. But, unlike a bush plane, you do have a chance to get off before it hits those trees.
Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon series of historical children’s adventure novels. You can follow him on Channel 9’s “Yukonomist” show or Twitter @hallidaykeith